See mkts trading above 16K in Sept: Deven Choksey

The markets were in a euphoric mood giving big thumbs up to the Manmohan Singh-led alliance winning Tuesday's trust vote. Both the frontline indices clocked gains of over 5%. The Nifty closed at 4,476 up 236 points, while the Sensex shut shop 838 points higher at 14,942.

Deven Choksey of KR Choksey Securities sees some profit-booking coming in during the course of this rally.

He feels investors will look at how the monsoon progresses and whether it’s going to have some severe impact on India going forward, and RBI’s Credit Policy. “The monsoon will be a bigger threat. If the situation worsens from here, the kind of confidence that we have on domestic demand may probably not hold true in subsequent periods. That would derail some of the earnings of companies, which is a bit scary. Credit Policy will offer the markets some breather. The Credit Policy is not going to be harsh. We will see interest rates soften going forward. The government is not likely to increase interest rates. Probably, inflation would stay under control. If these two factors work in favour of markets, then we will see a gradual rise with some amount of profit-booking in between.”

According to Choksey, a near-term bottom is in place for the market. “The market has made a bottom around 12,800-12,300 levels for the time being now. It can bounce back above 16,000 somewhere in September. So, this quarter the market would trade rangebound between 12,300 and 16,500.”

Any reform which bring about consolidation in the public sector banking space would be welcome, he said. “That possibly would allow some banks to meet Basel II norms.”

Vijay Bhambwani of bsplindia.com said he wouldn’t be surprised to see 4,650 on Nifty spot being tested or overcome depending on tomorrow's put-call ratios and volumes. "I am enthused by the fact that this rally has not been powered by short-covering. There are a whole lot of shorts waiting to get squeezed, and should one see more uptick, we will see an upmove coming in short covering as well."